Investment Rule

By cla on June 23, 2008 7:54 PM

By Mary Shafer

Doug Gorence turns conventional wisdom upside down

The five framed Chinese calligraphy prints on the walls of Doug Gorence's Minneapolis office are striking, their graceful black strokes both elegant and eloquent. One symbol represents patience; another, humility. The rest symbolize skepticism, contrarianism, and, perhaps most interestingly, danger/opportunity, which, in Chinese -- and to Gorence -- mean the same thing.

"The best opportunity we have is when others are fleeing," says Gorence, a 1977 CLA graduate in economics.

His downtown Minneapolis office houses the University of Minnesota Foundation Investment Advisors (UMFIA), where Gorence is president and chief investment officer. The prints on display represent the values he brings to this job. More subtly, they convey his belief that economics is as much art as accounting, dependent as much on creative thinkers as on investment-wise MBAs.

"Economics is a social science," says Gorence. "It touches psychology, history, politics, and more. In fact, the people I hire are not business people. They are creative, critical thinkers. That's the skill set I'm most interested in."

Gorence has led UMFIA since 1999, after the University Foundation formed it as a subsidiary to manage the University's long-term investments.

"At the time, the only things the University had were me and a briefcase," laughs Gorence. Well, that plus $600 million, a capital campaign about to launch, and the need for someone with the strategic and operational savvy to shield a public university's investments from its myriad financial and political pressures.

Today, the office's five full-time staff members, a billion-dollar-plus endowment, and an investment-return track record that places the University in the top quartile of its peers attest to the venture's success. Much of the credit goes to Gorence, who seems to see his job as much mission as business.

"One measure is how satisfied he is," says his wife, Jane. "A lot of people in this line of work make a lot of money for anonymous donors. The chemistry between Doug and the University has been the sense of shared mission."

For the Gorences, it's a fit that extends beyond the job. In 2000, the couple established the Douglas and Jane Gorence Endowed Scholarship in Economics, to provide an annual stipend to an undergraduate economics major who demonstrates potential and ability in the field.

"Our first thought was just that it was a good thing to do," says Gorence, "not just as a matter of philanthropy, but also as a way to tell other donors we feel strongly enough that we're willing to put our own dollars into the University. Beyond that, we asked ourselves, 'What do we value?' Education is high on the list. We're both products of public education, and we value access to that. We wanted to create the kind of opportunities we've had."

In one sense, Gorence's journey from his first postcollege job to this one has been a matter of yards. From his 12th-floor window he can look over at the First Bank Plaza -- First Bank Minneapolis in the 1970s -- where he got his first job as a newly minted liberal arts graduate, the result of another University connection. It seems that in his undergraduate days he and former economics department chair Jim Simler shared an enthusiasm for hockey. (Gorence's younger brother, in fact, was on the Gopher team that won the NCAA national championship in 1976.) So it was that the two got to know each other, not just in the economics department, but also rinkside at Gopher games. Simler was able to help Gorence, a commuter student who says he wasn't "terribly involved" in the University community, to land that first job.

Still, the journey across the street wasn't exactly a straight line. Rather, it was made by way of California and a motorcycle. In the 1980s, Doug and Jane (a University of Texas graduate), who had once worked together in Minnesota, caught up with each other in California. They had stayed in touch, but it was only after the California visit -- and a motorcycle ride together up the Pacific Coast Highway -- that they eventually married, returned to Minnesota, and began their family: Greg, now 17, and Elizabeth, 15.

A certified financial analyst whose heroes range from John Maynard Keynes ("one of the savviest investors who is also one of the greatest economists") to U of M Foundation chair Fred Friswold ("a wonderful role model, who gives money and time to support his values"), Gorence is resolute about how critical thinking and business -- and maybe, after all, Chinese wisdom, too -- are connected.

"My investment rule is to take the other side," he says. "Take the conventional wisdom and see where it's not right. Those who think like that are against the herd. Being a contrarian doesn't guarantee success, but if you add
experience and competence to that kind of critical thinking, you'll increase the likelihood of success."